It may seem counter-intuitive at first to position and market your business in such a way that your biggest competitor will want to buy you, but these strategic acquisitions are good news for a business seller. Who better to purchase your company than a bigger fish in your industry’s pond?
They will have the available capital, they know and understand your industry, and it is a big compliment to your business if they want to bring you into their fold.
How can a business owner position their company to attract this kind of buyer?
Building your brand should be a big part of any business owner’s goals, but if you are looking to get noticed by the competition you will need to have a brand that can contribute effectively to the market position of a competitor. To do that you will need to hold a decent market share. You also need to be able to describe your brand effectively in those key first meetings with a strategic buyer. What does your brand say?
In any growing and successful operation there is a core team that makes the business the well-oiled machine that it is. A strategic buyer is going to want this core team to remain in place, allowing for a seamless transition and putting aside any fears that you are the only glue that holds the company together.
Strategic buyers typically don’t buy companies that are in an asset-sale/liquidation/downward spiral, they want a business with a strong future. You should always have your eye on the future of your business, but when you are positioning yourself to be acquired you should be in the process of developing and building your business for the days ahead. This forward-thinking direction will be very attractive to strategic buyers.
This is a number you should always know, as it will be a figure on the top of the priority list for a strategic buyer. This number will speak directly to the amount of market share you hold, and the amount of market share that they will be acquiring if they buy you out.
Growing, Growing, Growing
As we mentioned before, the strategic buyer is typically looking for a business on the way up, not on the way down. Have the narrative of your growth and your projections ready to discuss, as well as knowing how your growth compares to the industry average. Do you know the size of the market you are in?
If you are considering selling your business, looking to a strategic buy from your competition might be a good move. Talk with your business broker about this type of buyer and whether this type of buyer would be right for your business.
Are you a business buyer who is horrified with the thought of your biggest competitor buying your company, but are curious about what the numbers might look like for you if they did? Would you like to know more about positioning your business to attract this type of buyer? Please leave us a comment or question here, and we will be happy to help you with strategic buyers.